2012 (10) TMI 1122 - AT - Income Tax

Summary

Issues involved:
The judgment involves the deletion of addition made by the Assessing Officer (AO) on account of difference in actual stock and stock as per books for assessment year 2005-06.

Details of the judgment:
1. The AO observed a discrepancy in the stock of white butter during a search, where physical stock was found to be NIL while the book stock was 1,48,813 kgs. The AO treated this difference as unaccounted sales and made an addition of Rs. 1.64 Crores.
2. The assessee explained that the stock was kept in a specific cold storage chamber with a required temperature level, but the authorized officer failed to properly inventory the stock during the search.
3. The assessee argued that the addition made by the AO was based on presumption as no evidence of unaccounted sales was found during the search.
4. The CIT(A) deleted the addition after considering the explanation of the assessee and referring to a decision of ITAT Ahmedabad Bench in a similar case.
5. The CIT(A) noted that the AO did not dispute the quantity shown in the financial statements for the year-end, indicating no difference in quantity by the end of the financial year.
6. The Tribunal upheld the CIT(A)'s decision, stating that no unaccounted sales were found, and the AO did not dispute the sales recorded in the books after the search.
7. The Tribunal found no merit in the revenue's appeal as the explanation provided by the assessee was deemed correct, and there was no evidence to support unaccounted sales.
8. The departmental appeal was dismissed, affirming the deletion of the addition made by the AO.

Separate Judgment:
No separate judgment was delivered by the judges in this case.